17 Better regulation
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13629/05
+ ADD1
COM(05) 518
| Commission Communication on an EU common methodology for assessing administrative costs imposed by legislation
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| Legal base | — |
| Document originated | 21 October 2005
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| Deposited in Parliament | 27 October 2005
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| Department | HM Treasury |
| Basis of consideration | EM of 10 November 2005
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| Previous Committee Report | None
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| Discussed in Council | 8 November 2005
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
17.1 The Spring 2005 European Council asked "the Commission
and the Council to consider a common methodology for measuring
administrative burdens with the aim of reaching an agreement by
the end of 2005". It said that any agreement should take
account of Commission pilot projects.
The document
17.2 The Commission Communication outlines a common methodology
for use at Community level and suggests steps towards its introduction.
It is based on the results of a "pilot phase" undertaken
by Commission staff from April to September 2005. The Commission
discusses the growing interest in the Community in quantifying
imposed administrative burdens, particularly in the context of
subsidiarity and proportionality. It notes that a number of Member
States are using or are planning to use the so-called Standard
Cost Model, introduced in the Netherlands in 2002, to assess administrative
burdens at the national level. It holds that extra costs for many
Member States inputting into a Community assessment would be minimal
as the methodology is built to a large degree on the Standard
Cost Model. The Commission then says that it believes a common
methodology is feasible, noting that the greater degree of convergence
between Community and national methodologies the more data collection
and other assessment costs would be reduced. It argues that the
methodology would, as long as it was not at the expense of analysis
of other impacts, such as environmental costs, add value by:
- increasing regulatory transparency;
- allowing a fuller assessment of the impact of
new proposals; and
- providing a relevant indicator for prioritising
simplification work and for monitoring progress in reducing administrative
burdens.
The Commission then describes briefly the methodology
as consisting of three elements — a definition of administrative
costs, a core equation and a reporting sheet.
17.3 Finally the Commission suggests the next steps.
In the short term the Commission:
- intends to include the methodology
outlined in its impact assessment guidelines and evaluation guidelines;
and
- wants the Council to agree with it a common methodology
based on the results of the pilot phase.
For the longer term, the Commission proposes:
- to examine, with the help of
a group of national experts on better regulation, how to solve
outstanding methodological issues;
- drafting of a Community operational manual in
consultation with Member States;
- exploring whether the common methodology could
be used to assess cumulative burden at sectoral level; and
- to open inter-institutional negotiations with
a view to including the common methodology in the Inter-Institutional
Agreement on Better Law-making.
The Government's view
17.4 The Economic Secretary to the Treasury (Mr
Ivan Lewis) says the Government thinks better regulation a top
priority for the economic reform agenda in the Community. He asserts
that about half of all significant regulation affecting business
emanates from Brussels. He argues that effective and well-focused
regulation can play a key role in helping to tackle market failures,
that well-designed and proportionate intervention is essential
to underpin the operation of markets and that Community regulation
has brought many benefits — often being the best way to
tackle cross-border issues such as environmental protection. But,
he continues, badly developed regulation does not achieve its
objectives and can have damaging consequences for jobs and growth;
inefficient regulation can impose a significant burden on business
and research suggests that improvements in the regulatory regime
could increase productivity levels in many Member State economies.
17.5 The Minister, noting that regulatory costs are
often divided into policy costs and administrative costs, the
former being those costs directly attributable to the policy goal
and the latter those costs associated with familiarisation, record
keeping and reporting, including inspection and enforcement, says
that on average administrative costs are thought to be around
30% of the total costs of regulation. He argues that in aggregate
administrative costs have a significant impact on the Community's
economy saying that it is estimated that administrative burdens
account for at least 3% of Community Gross Domestic Product.
17.6 The Minister continues that the Government therefore
welcomes the Commission's commitment to begin measuring the administrative
burdens of new proposals in impact assessments, ensuring that
the administrative costs of new proposals are included in the
Commission's cost benefit analysis. Impact assessments must ensure
the full costs and benefits are understood and considered before
the decision is made. Furthermore, measuring administrative costs
is the first step in ensuring they are managed and kept to the
minimum necessary.
17.7 The Minister notes that there is also scope
for the methodology to be used in measurement of existing regulation
and in setting targets for their reduction and that methodology
to measure the stock of existing regulation has been used successfully
in the Netherlands, Denmark and Belgium, where significant reductions
of up to 25% have been achieved for the entire stock. He says
that the Government is committed to such action at the national
level and would encourage the Commission to pursue it at the Community
level.
17.8 Finally the Minister says the Council has asked
the Commission to start measuring administrative burdens on a
consistent basis and in line with transparent criteria, as part
of integrated impact assessments of new regulatory proposals from
January 2006.
Conclusion
17.9 We welcome this move to measure, and we hope,
lessen the administrative burden of new regulation. This could
make a useful contribution to the important cause of better regulation.
We clear the document.
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